![]() ![]() Other useful statements reinforcing existing practice include approaches to guarantee pricing, methodologies on performing benchmarking analyses, and the importance of identifying the features and attributes of transactions. For regulated financial service businesses, the guidance cross-refers (via the existing post-BEPS footnote in Chapter I of the OECD Guidelines) to the long-established guidance in the 2010 OECD Report on the Attribution of Profits to Permanent EstablishmentsĬash pooling arrangements have seen increased scrutiny from tax authorities in recent years and therefore the OECD guidance in this area is particularly welcome.Įxplicit statements that the pricing of intra-group loans should take into account the perspectives of both borrowers and lenders are useful – in practice, more focus has often been placed on the circumstances of borrowers. The new guidance follows many long-standing practices of applying the OECD Guidelines to financial transactions, but it is helpful to have these approaches set out and supported by examples. Specific areas including the role and remit of treasury functions, intra-group loans, cash pooling, hedging, financial guarantees and captive insurance are covered. This will continue to be an area for potential double taxation if countries take different views, without recourse to resolution under double tax treaties. There remains, as anticipated, the option for countries to apply domestic rules in respect of when a loan should be considered to be equity for tax purposes, and the guidance is not prescriptive on how this should be approached. The focus is broadly on accurate delineation of the transactions being priced based on facts and circumstances, in line with the approach to other intra-group transactions. This is the first time that specific guidance on pricing intra-group financing transactions has been included, and represents a big step forward in preventing and resolving disputes in this area. ![]() The long-awaited new chapter of the OECD Transfer Pricing Guidelines sets out guidance for businesses and tax authorities on how to determine whether financial transactions between associated enterprises are consistent with the arm’s length principle. ![]()
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